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An Analysis of Demand Elasticities for Fluid Milk Products in the U.S

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  • Davis, Christopher G.
  • Blayney, Donald P.
  • Cooper, Joseph C.
  • Yen, Steven T.

Abstract

This study examines retail fluid milk products purchase data from Nielsen 2005 home scan data. The demand for seven categories of fluid milk products were estimated: whole milk, whole flavored milk, reduced fat milk, flavored reduced fat milk, buttermilk, canned milk and all other fluid milk products. Analyses of the purchases of seven fluid milk categories based on the Nielsen 2005 home scan retail data are used to determine the roles marital status, age, race, education, female employment status and location play in the empirical estimations of aggregate demand elasticities. To derive the demand elasticities, a censored translog demand system is used. The results reveal that price and income are the main determinants of demand for fluid milk products with a few minor determinants. All own-price elasticities are greater than unity for all fluid milk categories except for the compensated reduced fat milk. All expenditure elasticities are inelastic except for reduced fat milk and most of the fluid milk categories are substitutes.

Suggested Citation

  • Davis, Christopher G. & Blayney, Donald P. & Cooper, Joseph C. & Yen, Steven T., 2009. "An Analysis of Demand Elasticities for Fluid Milk Products in the U.S," 2009 Conference, August 16-22, 2009, Beijing, China 51791, International Association of Agricultural Economists.
  • Handle: RePEc:ags:iaae09:51791
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    References listed on IDEAS

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    1. J. Scott Shonkwiler & Steven T. Yen, 1999. "Two-Step Estimation of a Censored System of Equations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 972-982.
    2. Blanciforti, Laura Ann & Green, Richard, 1983. "The Almost Ideal Demand System: A Comparison and Application to Food Groups," Agricultural Economics Research, United States Department of Agriculture, Economic Research Service, issue 3.
    3. Huang, Kuo S. & Lin, Biing-Hwan, 2000. "Estimation of Food Demand Nutrient Elasticities from household Survey Data," Technical Bulletins 184370, United States Department of Agriculture, Economic Research Service.
    4. Huang, Kuo S. & Lin, Biing-Hwan, 2000. "Estimation Of Food Demand And Nutrient Elasticities From Household Survey Data," Technical Bulletins 33579, United States Department of Agriculture, Economic Research Service.
    5. Schmit, Todd M. & Dong, Diansheng & Chung, Chanjin & Kaiser, Harry M. & Gould, Brian W., 2002. "Identifying The Effects Of Generic Advertising On The Household Demand For Fluid Milk And Cheese: A Two-Step Panel Data Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 27(01), July.
    6. Yen, Steven T. & Lin, Biing-Hwan & Davis, Christopher G., 2008. "Consumer knowledge and meat consumption at home and away from home," Food Policy, Elsevier, vol. 33(6), pages 631-639, December.
    7. Wyatt Thompson, 2004. "Using Elasticities from an Almost Ideal Demand System? Watch Out for Group Expenditure!," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(4), pages 1108-1116.
    8. Gould, Brian W., 1996. "Factors Affecting U.S. Demand For Reduced-Fat Fluid Milk," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 21(01), July.
    9. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
    10. Heien, Dale & Pompelli, Greg, 1988. "The Demand For Beef Products: Cross-Section Estimation Of Demographic And Economic Effects," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 13(01), July.
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    More about this item

    Keywords

    Nielsen home scan retail data; milk demand; elasticities; fluid milk; reduced fat milk; whole milk; flavored milk; canned milk; buttermilk; non-linear AIDS; censored translog demand system; Consumer/Household Economics; Demand and Price Analysis; C25; D12; Q11;

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices

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